Call for single contract law system

Viviane Reding, the European commissioner for justice, is planning to launch discussions on a single European legal regime for contract law.

Reding will on 30 June present a paper aimed at simplifying the current situation, in which businesses and consumers have to deal with different legal regimes when they do business across national borders. The publication of the paper will coincide with the start of a public consultation that will run until January 2011.

Reding’s preference at this stage is to create an additional pan-European legal regime that businesses could use on a voluntary basis. It is referred to as a ‘28th system’, as it would complement the existing systems in the 27 member states.

Reding has said that this approach would put contractual relations in Europe on a “more reliable basis”.

But the plan is expected to encounter strong opposition from consumer groups and from member states.

The 28th system would cover the whole lifecycle of a contract, ranging from pre-contractual duties to remedies for breach of contract and conditions for termination.

Reding is suggesting that retailers’ websites could contain a ‘blue button’ that consumers could click if they wanted to have their transactions dealt with under European contract law, rather than national legal systems.

Retailers would also be able to opt to conduct their business with suppliers using the 28th system.

Losing control

Reding’s approach is likely to face resistance from national justice ministers, who last year adopted conclusions ruling out the creation of a 28th system.

Governments are concerned that Reding’s idea would reduce their control over the civil law that is applied on their territory. This concern is especially acute in the UK and Ireland because of their common law tradition.

Robert Heslett, president of the Law Society of England and Wales, said that the European Commission “must not neglect the common law system and undermine the global commercial significance of English contract law”.

He warned that international companies could take their business outside the EU. This would be damaging “not only for the UK but for the European Union’s internal market as a whole”, he said.

Pedro Oliveira of BusinessEurope, the European employers’ federation, said the benefits of Reding’s plan were not yet clear. “The most important question is: will it be helpful or simply add more confusion?” he said.

BEUC, the European consumers’ organisation, said that it was “very sceptical” about the creation of a 28th system. BEUC fears that businesses will be able to dictate whether they deal with consumers using national or European law. “We do not see the advantage – consumers need to rely on a solid set of rights,” it said.

Reding hopes to propose draft legislation to set up the 28th system by the end of next year. Work on it would proceed in parallel to a reform of EU consumer-rights legislation that is under way in the European Parliament and the Council of Ministers.